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Agreement reached on funding for SAA restructuring


The commitment was given in a letter the ministers sent to the airline's business rescue team.

FILE PHOTO. Picture: Reuters

Cape Town – Finance Minister Tito Mboweni and Public Enterprises Minister Pravin Gordhan have committed the government to making available funding to South African Airways for its immediate and longer term needs as it implements a business rescue plan.

“A letter of support that commits the government to ‘mobilise funding for the short-, medium- and long-term requirements to create a viable and sustainable national airline’ was signed by the ministers of finance and public enterprises on 15 July’,” the Department of Public Enterprises said on Thursday.

The commitment was given in a letter the ministers sent to the airline’s business rescue team.
It follows the adoption on Tuesday by the company’s creditors of the plan. They voted in favour of it by an 86% margin.
The department confirmed that the rescue plan calls for an amount of R10.1 billion to “fund the rescue plan, clean up and stabilise the balance sheet of SAA, restructure the rest of the group entities that are not in business rescue, provide working capital for the rest of the group’s entities and to create a stable and viable platform for a new restructured national airline”. 
It said varying tranches of money will be required as different aspects of the restructuring takes place.

The plan envisions the retrenchment of 2 700 employees at a cost of R2.2 billion.

The state is also committed to honour R16.4 billion in guaranteed debt to the loss-making carrier’s creditors.
Gordhan has been an enthusiastic proponent of rescuing rather than shuttering SAA, while Mboweni has repeatedly said he would prefer to close it down.
However, Cabinet gave its backing to efforts to save the airline.
African News Agency (ANA)